This is a Dell XPS system, priced at ~£680 (maybe less if i can use my sisters student discount)

Main questions are:

Are these specs reasonable for the price?
Would you recommend any changes?
Are there any other systems available with similar specs in this price range?
What would this be like for mid-range gaming?
Is upgrading the graphics to a 3GB GT 555M for £80 worth the extra cash?

Without spending any effort into doing specific mobile GPU research from my iPad, it looms like a very good laptop and is roughly £100 cheaper than I would expect.

The only thing I would suggest looking up is for reviews on that model, specifically looking for reports on how hot the laptop gets when gaming. The DELL XPS series is supposed to be aimed at gamers, but DELL are known for cutting corners where they can, and in laptops this might just mean the cooling system.

EDIT: it should have no troubles maxing out mid-ranged gaming, possibly with 2xAA on top.